Why Labs Don’t Work

October 15, 2010 § 1 Comment

I work for a Microsoft applied research lab (Live Labs Pivot), that was dissolved into Bing just last week.  Pivot is a cool piece of software, but it never made the ambitious impact I expected.  So I sat down and thought about what went wrong.  I talked with my management.  I talked with our out-going technical fellow.   I realized that I’d known the answer all along.

Applied research organizations like Bell Labs, Xerox PARC, Google Labs, were created to meld research and development.  Great research happens in a number of universities, great development happens in a few companies.  But true R&D is a rarity.  An obscene number of important inventions (networked computers, wireless networks, C, UNIX, the mouse, the GUI, lasers, etc. etc.) come from labs – so why don’t they accrue value to their parent company?  Why don’t I work for Xerox instead of Microsoft?  

Simply creating value for humanity isn’t in most companies’ DNA – they are interested in R&D insofar as it impacts the bottom line.  Despite the laundry list of patents, labs rarely make an impact on the business.  So are labs just rogue organizations filled with wannabe academics interested in tinkering?  Or are the parent companies so blind, that they can’t possibly see the impact of the lab’s innovations?

Certainly, some organizational dysfunction is to blame.   As organizations become entrenched in the market, they become conservative and inbred.  I guarantee most of Microsoft’s executive management only got a handle on this whole social networking thing after the Facebook movie.    And Microsoft execs aren’t alone.  Any Fortune 500 executive will be just as short sighted and out of touch.  It was the Xerox executives, after all, that let Steve Jobs come in and take a look around.

But, despite the constraints of an out-of-touch organization, I believe Labs could (and should) make an impact.  Labs are purposefully rogue organizations that cultivate a culture of disruptive innovation.  Labs experiment, and while not all experiments are successful (see Google Wave), some clearly incubate game-changing ideas.  The challenge of a Lab is to hone the mission, release early and often, and look for the opportunity to impact the business with every experiment.  Most Labs fail at this, because the engineers that are attracted to Labs lack the business sense to create viable business opportunities for their innovations.  Pivot fell into this trap. 

Even the most conservative organization can’t survive without R&D.  Execs that realize they are out of touch (like at Proctor and Gamble) hire design consulting firms to tackle hard problems and innovate new products.  Microsoft prefers to acquire innovative companies than develop innovations in house.  But there is a tax to outsourcing innovation.  At P&G lack of in-house innovation is a self-fulfilling prophecy – they will always  be dependent on the IDEOs of the world to create new products.  Microsoft frequently acquires an interesting start-up only to let the product die, and alienate the start-up’s entrepreneurial talent.

R&D Labs seem like a viable way to successfully innovate in-house.  But organizations need to provide an opportunity for Lab products to succeed.  And Labs should be built on the premise of creating business value, and stocked with employees who have the savvy to make this happen.

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§ One Response to Why Labs Don’t Work

  • Frank Wise says:

    I like your blog. Well written and thought provoking. I’d like to read more about your solutions to the issue.

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